Rona takeover a $3.2B 'win-win' deal: Lowe's CEO

MONTREAL -- The Lowe's home improvement chain is aiming to buy Quebec-based Rona Inc. for $3.2 billion cash in a friendly deal supported by the directors and management of both companies.

See Full Article

Lowe's sees Rona as a way to quickly become Canada's leading home-improvement retailer and make its first foray into Quebec, which accounts for nearly a quarter of the national market and where Rona is currently the leader.

Rona's board and management see the deal as a way to tap into Lowe's strength as a U.S.-based, multinational company while preserving its brand, business relationships and most of its current operations

"Overall, it's a win-win for both companies," Robert Niblock, Lowe's chairman and CEO, told analysts in a conference call after the announcement.

Niblock said the Canadian home improvement market is currently worth more than $45 billion and growing. Lowe's estimates a compounded average growth rate of 3.9 per cent between 2014 and 2018.

"We also like the market because of its long-term fundamentals, with its high level of home ownership and well-developed distribution infrastructure."

Niblock and other Lowe's executives also told analysts that Rona has made a number of improvements in the four years since the two companies came close to a similar takeover agreement before the attempt failed in the face of opposition from the Quebec government of the day and a large number of Rona's independent dealers.

"We believe the time is right to take the next step in the evolution of the Rona family," Rona chairman Robert Chevrier said in a statement Wednesday morning ahead of a separate conference call planned later in the morning.

"The team at Lowe's has presented us with an excellent plan that enables our company to maintain its brand power while at the same time leveraging Lowe's global presence to build upon and expand our reach."

Chevrier also said that Lowe's has made commitments to the Canadian company's employees, suppliers and independent dealers.

The Montreal-area company employs about 17,000 people directly across Canada and its affiliated dealers employ a further 5,000.

For shareholders, Lowe's (NYSE:LOW) is offering $24 cash per share of Rona (TSX:RON) -- about double what the stock was worth at the end of trading on Tuesday before the announcement.

Lowe's already has a presence in Ontario and other parts of Canada, but its network of 42 stores trails Rona and U.S.-based Home Depot. In the United States, Lowe's is the No. 2 home improvement retailer after Home Depot (NYSE:HD).

In total, Rona has nearly 500 stores owned by the Montreal-area company and independent affiliated dealers across Canada.

Rona's corporate stores come in three main formats spread across most geographic regions: 87 in Quebec, 72 in the West, 63 in Ontario where Lowe's Canada has its biggest presence, and 14 in the Atlantic region. Rona also has nine distribution centres and a head office in Boucherville, Que., in the South Shore region near Montreal.



Advertisements

Latest Economic News

  • Venezuela debuts new banknotes amid soaring inflation

    Economic CTV News
    CARACAS, Venezuela -- Venezuelans stood in long ATM lines Monday to take out new, larger-denominated bills that President Nicolas Maduro hopes will help stabilize the crisis-wracked economy. Maduro last month said he was scrapping circulation of the most used bill, the 100-bolivar note, and replacing it with new bills ranging from 500 to 20,000 bolivars. Source
  • Layoffs begin as Gildan backs away from American Apparel factories

    Economic CBC News
    American Apparel LLC said it had started to lay off staff on Monday, after Canadian apparel maker Gildan Activewear Inc. withdrew its initial plan to acquire some of the bankrupt U.S. fashion retailer's manufacturing operations. Gildan won the rights to American Apparel's brand with an $88 million US bid in a bankruptcy auction last week. Source
  • Trump threatens 35% border tax on German autos

    Economic CBC News
    U.S president-elect Donald Trump warned German car companies he would impose a border tax of 35 per cent on vehicles imported to the U.S. market, a plan that drew sharp rebukes from Berlin and hit the automakers' shares. Source
  • Rich man, poor man: A closer look at Oxfam's inequality figures

    Economic CBC News
    A combination of static disposable incomes and rising costs has created a feeling among many middle-class Canadians that they are falling behind. Reports point out the declining quality of our jobs and that the top CEOs earn 193 times what the average worker earns. Source
  • Luxottica to join with Essilor in $70B merger of two eyewear giants

    Economic CBC News
    A global eyewear colossus worth almost $70 billion Canadian is set to be created as Italy's Luxottica — owner of Ray-Ban and Oakley glasses — merges with France's Essilor, owner of Crizal, Transitions, Clearly Contacts and other brands. Source
  • Loonie, TSX lower; U.S. stock markets closed

    Economic CTV News
    TORONTO -- The Canadian dollar and Toronto Stock Exchange were lower in late-morning trading, with key U.S. markets closed for a holiday. The S&P/TSX composite index dropped 50.54 points at 15,446.74 after nearly two hours of trading. Source
  • Hard Brexit details send British pound to hard landing under $1.20 US

    Economic CBC News
    The British pound fell to its lowest since 1985 on Monday after speculation ramped up that British Prime Minister Theresa May will lay out her plans for a so-called "hard Brexit" from the EU to European lawmakers tomorrow. Source
  • IMF expects Canada's economy to expand by 1.9% this year

    Economic CBC News
    The International Monetary Fund is projecting strengthening world growth in 2017 and has upgraded its estimates of Canada's economic potential. However the Washington-based agency says any moves by the incoming Donald Trump administration to restrict trade could dampen the improving outlook. Source
  • Home sales rebound in December after large drop in November: CREA

    Economic CTV News
    TORONTO -- The Canadian Real Estate Association says home sales climbed 2.2 per cent in December compared with November as they recovered from a dip following the introduction of new mortgage rules. On a year-over-year basis, the real estate association says home sales were down five per cent last month compared to December 2015. Source
  • Home sales won't be as big an economic boost this year, CREA says

    Economic CTV News
    TORONTO -- Home sales, one of the pillars of the economy last year, are not going to be as big of a driver this year as the effect of new federal mortgage measures fully kicks in, the Canadian Real Estate Association said Monday. Source